William Dudley, President of the Federal Bank of New York, spoke earlier today at New York University's Stern School of Business, and he gave a measured, somewhat positive prognosis of the US economy. While he said that there are mixed signals coming from the employment data, there is some good news in the data on consumer spending, productivity, and consumer and business confidence.

On the activity side, a wide range of indicators show a broadening and strengthening of demand and production. For example, on the demand side, real personal consumption expenditures rose at a 4.1 percent annual rate during the fourth quarter. This compares with only a 2.2 percent annual rate during the first three quarters of 2010.

Orders and production are following suit. For example, the Institute of
Supply Management index of new orders for manufacturers climbed to 67.8
in January, the highest level since January of 2004.

The revival in activity, in turn, has been accompanied by improving
consumer and business confidence. For example, the University of
Michigan consumer sentiment index rose to 77.5 in February, up from 68.9
six months earlier.

Indeed, the 2.8 percent annualized growth rate of real gross domestic
product (GDP) in the fourth quarter may understate the economy's forward
momentum. That is because real GDP growth in the quarter was held back
by a sharp slowing in the pace of inventory accumulation. The revival in
demand, production and confidence strongly suggests that we may be much
closer to establishing a virtuous circle in which rising demand
generates more rapid income and employment growth, which in turn
bolsters confidence and leads to further increases in spending. The only
major missing piece of the puzzle is the absence of strong payroll
employment growth. We will need to see sustained strong employment
growth in order to be certain that this virtuous circle has become
firmly established.

So, there's the good news. But Dudley was careful to caution against premature optimism. And he while he outlined the dangers of low-interest rates, and the chance they might "foster a buildup of financial excesses or bubbles that might pose a medium-term risk to both full employment and price stability," he also explained that the Fed does have tools to avert crisis:

To summarize the main points, we have a considerable amount of slack, little evidence of discontinuous speed limit effects, and little inflation pass-through from commodities into core inflation when inflation expectations are well-anchored, which is currently the case. This suggests that the biggest risk in terms of higher underlying inflation over the next year or two is that inflation expectations could become unanchored. This might occur, for example, if there were a loss of confidence in the ability and/or willingness of the Federal Reserve to tighten monetary policy in a timely way in order to keep inflation in check.

In this regard, the proof of the pudding will be in our actions—talk is cheap. What is key—that the appropriate policy steps are taken in a timely manner.

It is significantly harder to start a business today than it was five years ago. And while, as an economic indicator, that is bad news generally, it may not be an entirely bad result of the Global Economic Crisis and the recession. With fewer available resources, an entrepreneur today has to be more sure of his or her concept before launch. And one might say that an entrepreneur has to earn the right to start a business.

Edward Hess, professor of Business Administration at the University of Virginia's Darden School of Business, is not discouraged. He says there are plenty of opportunities out there for entrepreneurs who are ready to map out a successful strategy. He just believes that the approach should be "conservative, cautious." And he offers some valuable advice on how to get started:

This is an excerpt from a longer interview at Big Think. Watch the full interview here.

The ongoing credit crunch and the Great Recession should have reminded small business owners of the importance of cash. And more specifically, the need to have adequate cash on hand. At Open Forum, Judith Aquino offers up five important pieces of advice for making sure businesses have a well managed cash flow system:

We have access to more experts on a daily basis than ever before. Thanks to the proliferation of online information portals, interview programs on television and radio, the common citizen no longer need be limited by the advice of the experts to whom they have a direct connection. English economist Noreena Hertz argues that this may be a problem. She says we have become addicted to experts, and we've shut off the independent decision making parts of our brains. The result, she argues, is that "paradigms take too long to shift." Financial crises are only one of the negative outcomes.

The majority of internet users in the US will be on Facebook soon. eMarketer is projecting that use of Facebook will increase by over 13% this year, bringing the total users to 132.5 million. That represents 57% of internet users, according to eMarketer. And even more opportunities for marketers to connect with valuable consumers through social media. But with the competition also likely to want to take advantage of Facebook's growing community, it is more important than ever to have a consistent approach.

The Economists Intelligence Unit's annual report on the relative liveability of cities is out, and Vancouver remains at the top of the list. Here's the top ten:

From the report summary:

Vancouver (Canada) remains at the top of the ranking, a position that can only have been cemented by the successful hosting of the 2010 winter Olympics and Paralympics, which provided a boost to the infrastructure and culture and environment categories. Only petty crime presents any difficulties for Vancouver, although this would be a typical shortfall of any such location. Violence is reportedly on an upward trend in the city, but the figures need to be put in context. A murder rate of 2.6 per 100,000 population recorded in 2009 is certainly above the Canadian average of 1.8. However, it remains on a par with the rate in innocuous locations such as New Zealand and Finland, and amounts to one-half of the US average of 5.4 murders, with New York reporting a rate of 6.3 homicides per 100,000 (both figures are for 2008).

These advantages are shared with a number of other cities in the survey, and the variation between surveys is minimal. Just 2.3 percentage points separate the top ten cities, where the only change in the current survey is a slightly lower score for Vienna. As a result, Melbourne rises to become the second highest ranked city.

This list tends to draw some heated conversations, especially in the US where the top ranking city, Pittsburgh, comes in at 29th overall. But it is important to note that what the list is designed to do is help companies better understand living conditions (including costs) for their workers in various locations.

The concept of liveability is simple: it assesses which locations around the world provide the best or the worst living conditions. Assessing liveability has a broad range of uses, from benchmarking perceptions of development levels to assigning a hardship allowance as part of expatriate relocation packages. The Economist Intelligence Unit’s liveability rating quantifies the challenges that might be presented to an individual’s lifestyle in any given location, and allows for direct comparison between locations.

Entrepreneurs with the desire to run a small business have two choices: start their own company or buy and run a company. Among the advantages of taking over an existing business: you don't have to birth the company, you just have to make it grow up. But Entrepreneur's Jennifer Wang warns that you better buy a company that is healthy. Citing data from a Northeastern University study, Wang places the failure rate for purchasers hoping to turn around a struggling startup at 85%. Wang shares some valuable advice from a business matchmaker:

Buying a profitable business, on the other hand, is another matter entirely. You've got cash flow from Day One, an established reputation and, if you're lucky, a seller who will help finance the deal, says Ted Leverette, president of "Partner" On-Call, a franchise based in North Palm Beach, Fla., that matches buyers with sellers of small and midsize businesses.

Leverette has several baseline requirements for a business purchase. First, no matter how glowing the sales talk, don't buy anything that hasn't been profitable for the last five years--and that includes the Great Recession. "Absolutely don't buy anything that has an annual pretax net cash flow under $100,000," he says. "That's the smallest you want to go."

With the rise of the virtual office and with more companies' offices being spread across town, the country, and even the globe, executives are finding it harder to have personal connections with their employees. But Ram Charan argues that the "personal touch" is made even more important by the changing workplace. Charan, Senior Fellow at Wharton and co-author of The Leadership Pipeline: How to Build the Leadership-Powered Company, says that the new workplace places a premium on communication skills--and no, he doesn't think company-wide emails do the trick:

Rudebusch argues that the unemployment rate is key, and that the slow rate of recovery for jobs trumps overall economic recovery when it comes to any move on the target interest rates:

Given the extended nature of the expected recovery to levels of unemployment and inflation consistent with the Fed's mandate for full employment and price stability, the policy rule also suggests little need to raise the funds rate target anytime soon. Of course, this projection of future policy will change as economic forecasts are revised. Such conditionality is consistent with the FOMC's forward-looking policy guidance from its January 26 meeting, that "economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period." In the simple rule, the length of the "extended period" depends on the expected paths for unemployment and core inflation. Therefore, the downward revision over the past few months to the projected path of the unemployment rate translates into a higher path for the funds rate and an earlier liftoff from a zero funds rate. However, according to the simple policy rule of thumb, the positive unemployment news since last October appears to have shortened the duration of the "extended period" of near-zero interest rates by only about three months. Substantial monetary policy accommodation appears warranted for some time.

Case Western Reserve'sScott Shane is trying to figure out whether small business owners are finding it easier to get credit now than during the recession. And, as he shares at Small Business Trends, he's found conflicting data. On the one hand, there is the trend of more loan officers reporting looser credit standards, as Shane shows here:

And yet, according to a couple of key surveys, small business owners themselves say they have not seen any loosening of standards. Still, Shane finds some cause for optimism amid all the confusion:

Maybe I should look at the bright side. The lack of agreement that small business access to financing got worse in the past year means that the situation is improving. Before the recovery started everyone agreed that small business access to credit had deteriorated.

To the victors go the spoils. In the world of high tech business, Amazon has been one of the victors. And the spoils have been smaller companies. In the past year, Amazon has acquired at least six companies, Julianne Pepitone reports for CNN Money. Pepitone tells te story of three startups that became part of Amazon: Exchange.com, AmieStreet.com, and Zappos. Each acquisition had a different ending. Exchange.com was brought inside Amazon headquarters. Zappos has so far continued to operate largely as it always has. And ArnieStreet.com was basically swallowed up after being acquired last year:

In September, immediately after the acquisition, Amazon announced it was shutting down AmieStreet.com and redirecting its users to Amazon.com. Users' downloaded songs were ported over to Amazon, but that was the end of the demand-based pricing -- and the AmieStreet.com business model.

"There was no understanding or guarantee as far as a go-forward plan," Roman says. "We didn't know what they were going to do, and we didn't have anything to do with the day-to-day anymore."

Amie Street, Inc., still exists and Amazon remains an investor and board member of the company. Without its namesake site, Amie Street now focuses on Songza, a music-streaming service the company acquired in 2008.

We have spent a lot of virtual ink on examining the utility of Twitter as a business tool--especially for small business and marketers. But it is impossible not to lose sight of the adoption of Twitter as an overall tool for communication, especially with events across North Africa and the Middle East, where several key social media sites have been vital to pro-democracy protesters' ability to organize mass demonstrations. In an interview with Terry Gross of WHYY and NPR's Fresh Air, Twitter co-founder Biz Stone shares his amazement at how important and widespread the microblogging service has become. He addresses events in Egypt, as well as rumors of Twitter's multi-billion-dollar evaluation and possible purchasers:

At Econbrowser, James Hamilton takes a crack at evaluating the effectiveness of the Fed's latest quantitative easing tactics (and includes some helpful graphs for anyone trying to teach the subject):

The graph below provides our calculations of the average maturity of publicly-held debt both before and after the Fed's operations, updated to include the first 3 months of QE2. The blue line is the average maturity (in weeks) of debt issued by the U.S. Treasury. The green line is the average maturity of publicly held debt, that is, the green line represents the results of subtracting off the Fed's holdings of Treasury debt. Historically the green line was above the blue. This is because the Fed preferred to buy the shorter-term debt, as a result of which the average maturity of the remaining debt held by the public (green) was bigger than that for the debt as originally issued (blue). However, since the start of 2008, that relation has been reversed-- the Fed has been buying a disproportionate share of the longer-maturity debt, and thus has been a factor in reducing the average maturity.But also since 2008, the Treasury has been issuing more long-term debt faster than the Fed has been buying it, so that the green line continues to rise over time. What we find in the latest data is that this trend has continued over the last 3 months, even with QE2. The graphs below highlight details of the last year. The top panel is the average maturity of publicly-held Treasury debt inclusive of all Fed operations, that is, it corresponds to the green line in the preceding figure. Although the average maturity in the second and third months of QE2 (December and January) fell a little below that for the first month (November), the average maturity in every one of these three months was bigger than in every month of the two years prior to QE2. The second panel shows the fraction of publicly-held Treasury debt (again, after netting out the Fed's operations) that is of 10 years or longer maturity. This has gone on to make new highs in both December and January.

Our conclusion is that if QE2 made a positive contribution to the improving economic indicators since the program began, it could not have been through the mechanism of shortening the maturity of publicly-held Treasury debt.

There are, to be sure, other places where the Fed's QE policies could have made some sort of impact, and Hamilton notes this in his post. Read Progress report on QE2 here.